HSBC initiated coverage on multiple retailers early Friday, including Dow Jones stocks Walmart and Home Depot, as well as Target, Lowe's, Costco and Dollar General. Walmart stock climbed Friday while HD shares dipped.
The overall U.S. retail sector is still a "vast market set for further growth," HSBC wrote in an early Friday note. The coronavirus pandemic accelerated the retail shift to digital/online channels. But well developed methods of drawing customers to purchase goods online after visiting a store, what the analyst calls offline-to-online approaches, appear key to building and maintaining market share.
HSBC says the Walmart stock is its preferred name in retail. The firm initiated coverage of Walmart with a buy rating and a price target at 200 — about 23% above where the Dow Jones stock closed on Thursday.
HSBC put Dollar General at the bottom of its list. The chain lacks a digital strategy, HSBC says. It also has greater exposure to consumer spending on discretionary goods, a metric showing signs of slowing. HSBC gave DG stock a reduce rating and $1o2 price target.
HSBC initiated coverage of Target, Home Depot, Lowe's and Costco with hold ratings. The firm has a $140 price target for TGT stock and sees Costco trading around $600. HSBC has a $365 price target for Home Depot and a $250 target for LOW stock.
Walmart Stock
Walmart stock inched up 0.3% Friday. The Dow Jones stock ended Thursday at the top of a buy range, up not quite 5% from a mid-June breakout. The stock is up 14.5% so far this year.
Costco climbed about 0.6% during Friday trade. HD stock ticked slightly lower, down nearly 5% in its worst week since February. Target fell 4% while Dollar General eased 1.5%. Lowe's dipped by a fraction, marking its sixth consecutive decline.
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